Pay stoush looms at Ten

Ten chairman Lachlan Murdoch has reportedly met with proxy advisors in a bid to gain support for the company’s board ahead of its AGM.
Photo: Reuters

by
Ben Holgate

Ten Network is facing a potential investor revolt against executive pay and the size of its board as chairman
Lachlan Murdoch
seeks to ward off a protest vote at the struggling TV broadcaster’s upcoming annual meeting.

Proxy adviser ISS has also expressed its concern to Mr Murdoch that Ten might be forced to undertake another capital raising, while the Australian Shareholders Association (ASA) has suggested Ten’s billionaire shareholders might privatise the company.

The ASA will recommend that shareholders vote against the company’s remuneration report because it terminated its policy for short and long-term incentives for executive pay on August 31.

“There has been significant erosion of value," said ASA chief executive Vas Kolesnikoff.

Ten’s share price has slumped 65 per cent over the past year amid poor ratings and falling TV advertising revenues.

It is understood another proxy adviser is considering recommending shareholders vote against the remuneration report.

Mr Murdoch and deputy chairman Brian Long have met with the ASA, ISS, Ownership Matters and the Australian Council of Superannuation Investors ahead of Ten’s annual meeting on December 6.

Although ISS considers chief executive
James Warburton
’s fixed pay of $2.2 million to be “high", ISS and Ownership Matters are supporting the remuneration report following Ten’s decision not to pay executive bonuses in the 2012 financial year.

Related Quotes

Company Profile

However, ISS and the ASA think Ten’s board of 11 directors is too large and want board seats to be reduced to six to eight.

The ASA is recommending against the election of Siobhan McKenna, who was appointed a director in June. The ASA argues Ms McKenna is not independent because she is managing partner of Mr Murdoch’s private company, Illyria, and represents gaming magnate
James Packer
on the board. Mr Murdoch and Mr Packer each own 9 per cent of Ten.

ISS has expressed its concern to Mr Murdoch that Ten might be forced to undertake another capital raising, following a $200 million raising in June. “We asked if an additional capital raising was on the decks," said Daniel Smith, head of Australian and New Zealand research at ISS. “They basically said nothing’s on the table."

Although it was “too early to tell" if Ten required another equity raising, Ten would have no choice “if they get close to breaking the [debt] covenants," he said.

Mr Kolesnikoff said that instead of a capital raising, Ten’s billionaire shareholders –
Gina Rinehart
(10 per cent),
Bruce Gordon
(14 per cent) and Mr Packer – as well as Mr Murdoch, could “privatise it at a very low price".